Car manufacturer Volkswagen Group has chosen OpenStack as its global standard for its next generation private cloud platform, as part of a worldwide standardization project to reduce IT costs and increase automation.

The company signed the deal with start-up Mirantis over the major players in the industry. While the move represents one of the biggest wins to date for the start-up, it would appear that Red Hat have lost out on a healthy deal in the process. Volkswagen is currently a customer of Red Hat, though it is not clear to what degree the relationship will continue.

“As the automotive industry shifts to the service economy, Volkswagen is poised for agile software innovation,” said Mario Müller, VP IT Infrastructure at Volkswagen. “The team at Mirantis gives us a robust, hardened distribution, deep technical expertise, a commitment to the OpenStack community, and the ability to drive cloud transformation at Volkswagen. Mirantis OpenStack is the engine that lets Volkswagen’s developers build and deliver software faster.”

Volkswagen highlighted the move to a private cloud platform will enable the business to better compete in an ever-more digitally enabled world. Müller said that four trends drove the company towards a more agile cloud computing platform, as the new platform enables greater levels of automation as well as a less consuming procurement process.

“Ubiquitous connectivity means we’ll have 50 billion smart sensors in end devices by 2030,” said Müller. “Cloud computing means data access everywhere. That means the amount of stored data doubles every two years. Third, social media. We have 1.3 billion Facebook users today, heading towards 7 billion. And big data. We can do real-time analysis of mass amounts of data.”

Initially Volkswagen will move its infrastructure to Infrastructure-as-a-Service, ending with Platform-as-a-Service for the infrastructure model. On IaaS, Volkswagen will manage the middleware, runtime, data and applications, whereas Mirantis will manage the operating system, virtualization layer, servers, storage and networking, while on PaaS the company will only manage data and applications. The company aim to have PaaS up and running by July of this year. The transition to the IaaS model was completed at the end of 2015.

“First, it’s a service (the current IaaS platform) and not simply dedicated hardware,” said Müller. “The target VW internal audience is administrators and technical competence centres. It’s not designed for end users. The IaaS services provide virtualized hardware computer, networking and storage running on Linux with root access. Connectivity is via VW’s intranet. It’s not yet connected to the Internet. It doesn’t support legacy applications and we don’t yet offer central backups. It’s available to our teams in America, Europe and Asia.”

The deal represents a major win for Mirantis, which previously counted Red Hat as one of its investors. In two rounds of fund-raising in January and June 2013, Mirantis raised $10 million in growth capital funding from various venture capitalists, as well as a further $10 million from Red Hat, Ericsson and SAP. The company then launched its own OpenStack distribution in October 2013, putting it in direct competition with Red Hat, though the technology still worked with Red Hat operating systems.

In recent years, the relationship between the two companies would appear to have soured as Red Hat announced in May 2014 that it would no longer provide support to Linux customers using non-Red Hat versions of OpenStack, contradicting the spirit of the open source community. Later that year in November the company also ordered all employees to stop working with Mirantis. The saga would not have appeared to have effected Mirantis’ perception in the market.

“OpenStack is the open source cloud standard offering companies a fast path to cloud innovation,” said Marque Teegardin, SVP at Mirantis. “It is our privilege to partner with Europe’s largest automaker and we are thrilled to support them as they use the software to out-innovate competitors and expand their business on a global scale.”